Denied rightful access to the furlough scheme

22 October 2020

A new report from the Institute for Employment Studies (IES) reveals first-hand accounts of some employers denying eligible employees access to the Job Retention Scheme (JRS), and evidence of staff who have had to leave jobs due to management failing to provide adequate protection against the threat of COVID-19. The research also found no evidence of private sector employers supplementing staff wages under furlough – a cornerstone of the chancellor’s recently announced Job Support Scheme.

The findings come from an interim report: The impact of COVID-19 on low-income households. The research is funded by the Standard Life Foundation, as part of a project exploring the employment and financial impacts of the pandemic on low-income working households.

IES researchers conducted 40 in-depth interviews with those currently in-work as well as those who had recently lost their job across low-pay sectors such as hospitality, retail, administration and support services, as well as health and social care. While the Job Retention Scheme has supported over 9 million jobs since launched in April, there is increasing concern for those that have fallen through the cracks – an issue that predominantly affects women in part time work and on variable hours.

Research revealed that some respondents who worked on-demand via agencies, such as domiciliary care workers, saw a significant reduction in the hours they were being offered during lockdown. These had failed to recover following the easing of restrictions. Others, usually working part-time hours and on zero-hours contracts, were made redundant from their job. Several respondents asked their employer why they had made this decision and why they were not being furloughed. The reasons given included their employer questioning their eligibility for the JRS (despite working for their employer several months prior to lockdown) and being unable to calculate their furlough entitlement due to losing records of their employment from the past year.

In the context of increased health risks posed by COVID-19, interviewees were asked about the specific risks posed by their work and their feelings around safety and wellbeing in the workplace. Responses varied between industry sector. Retail workers (particularly those who worked for large supermarket chains) said that they felt their employer had taken adequate measures to minimise the health risks posed by their job. Workers in the hospitality industry meanwhile felt less protected. None of the hospitality workers that participated in the study had been provided with PPE; in all cases, they had purchased their own masks and gloves to help them feel safer at work.

Those working in the social care sector had equally mixed experiences, with the level of safety measures taken by employers widely varying between workplaces. Some working in domiciliary care as well as residential care homes raised concerns about the lack of measures to protect themselves and clients from COVID-19. They reported how their employer trivialised the need for PPE, stating that it was not necessary and that the virus was no different from seasonal flu. These individuals felt it ‘paid’ their employer to ignore the risks posed by the virus so they did not have to invest in additional equipment for staff. In these cases, interviewees either agreed to take voluntary furlough so they did not have to continue working during lockdown or resigned from their position to protect their health and wellbeing.

These findings have implications for the next stage of the government’s response to the pandemic. In terms of the recently announced Job Support Scheme, the research suggests that:

  1. Employers may not make use of this scheme for individuals who already work part-time or on demand. In the research, it was seemingly easier for some employers in low-pay industries to lay-off a section of their workforce, rather than put them on furlough.
  2. Employers could be further disincentivised from using the JSS if they have to make a financial contribution to the scheme. The research found that no private sectors employers been prepared to pay their furloughed employees 20 per cent of their wages for the time they were not working.
  3. Any individuals put on the scheme will still see a loss of income compared to their regular wages. For low-income households, this will add to the cumulative loss they have seen this year. The research demonstrates that this is not sustainable in the long-term. Many had depleted their savings to support their household through the past 6 months and had a more limited financial buffer to protect them against any further income instability.

The report also has implications for how the government can ensure that workplaces are ‘COVID secure’. In this study, those in insecure forms of work had limited means of protecting their own health and wellbeing in the workplace. Some employers were not responsive to the concerns workers raised throughout this period. In the more extreme cases, interviewees felt they had no choice but to leave their work either temporarily through voluntary furlough or by resigning. These findings suggest that workers need a formal means of recourse if they feel their employer is not complying with official guidance, and further steps are needed by government to ensure that these measures are enforced.

Lead author Jonathan Buzzeo said:

‘Our research highlights the range of issues stemming from the COVID-19 pandemic, which have placed those on the lowest incomes in a more precarious financial position and increased the health risks that they face at work.

‘In terms of finances, this includes loss of employment, even for those who were eligible for the Job Retention Scheme, as well as a loss for hours for those on part-time or zero-hour contracts. While we did speak to people who had been furloughed and had kept their job through this scheme, many did not have their wages topped up by their employer.

‘As a result, these individuals saw a reduction in their overall household income, sometimes by more than 20 per cent as interviewees reported that their calculated payments did not always take account for overtime and tips they regularly accrued through work.’

Mubin Haq, CEO, Standard Life Foundation (funders of the research), said:

‘Low-paid workers have highlighted some of the difficulties with the existing furlough provision and this does not bode well for the chancellor’s new Jobs Support Scheme. The research found no employers in the private sector were topping up their employee’s wages under furlough but employer contributions are at the heart of the new scheme.

‘This suggests the JSS will not have significant take-up in low-paid sectors, resulting in significant redundancies as well as cuts in working hours and pay. A rethink is urgently needed to avoid millions more facing financial distress.’

The report is available to download here